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What the Latest Mining Stock Technicals Tell Us

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Aug. 18 2020, Updated 10:35 a.m. ET

Technical analysis

Beyond reading the price movements of precious metals, we also have to analyze technical indicators, as price changes in precious metals are often closely tracked by mining stocks. As investors opt for mining stocks, they have to analyze technical indicators such as RSI (relative strength index) and call implied volatility.

In this part, we’ll look at Royal Gold (RGLD), Agnico-Eagle (AEM), Silver Wheaton (SLW), and Hecla Mining (HL), Silver Wheaton (SLW), and Hecla Mining (HL).

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Implied volatility

Call implied volatility is a measurement tool of the variations in a stock’s price concerning changes in the price of its call option. On September 21, 2017, Royal Gold, Agnico-Eagle, Silver Wheaton, and Hecla Mining had implied volatilities of 23.5%, 29.4%, 30.8%, and 34.8%, respectively. Mining shares are often seen as more volatile than precious metals.

RSI level

A stock’s RSI level tells us if it has been overbought or oversold. If a stock’s RSI score is higher than 70, it could be overbought, and its price may soon correct downward. If a stock’s RSI score is lower than 30, it could be oversold and could increase soon.

The RSI scores for the miners mentioned above have revived recently. Royal Gold, Agnico-Eagle, Silver Wheaton, and Hecla Mining now have RSI scores of 38.1, 25.1, 24.6, and 40.6, respectively. These especially low RSI levels signal a revival in prices.

The gold- and silver-based iShares Gold Trust (IAU) and iShares Silver Trust (SLV) have dropped 2.4% and 3.7%, respectively, on a 30-day trailing basis.

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